Executive summary

This Regulatory Impact Statement (RIS) sets out a policy to extend domestic status in state education to the school-age dependants of scholarship recipients funded by the New Zealand Aid Programme.

The preferred option is to apply the policy of extending domestic status by a Notice in the New Zealand Gazette which would be signed by the Minister of Education.

There are costs to the Ministry of Education and schools of extending domestic status to this group of dependants. However, there are not expected to be any additional administrative costs to schools of extending the domestic status exemption.

Adequacy statement

This RIS has been reviewed by the Ministry of Education. It has been assessed as being adequate according to the objectives defined by Cabinet [Cabinet Office Circular CO (07) 3 refers, dated 3 April 2007].

Status Quo

The dependant school-age children of New Zealand Aid Programme funded Commonwealth scholarships, and New Zealand Aid Programme and Ministry of Education PhD scholarship holders, are treated as if they are domestic students. In addition, the dependant school-age children of New Zealand Aid Programme scholarship holders – whose partners are holders of work permits – are treated as if they are domestic students. However, the majority (75 percent) of school-age dependants of New Zealand Aid Programme Scholarship holders are categorised as international students.

Problem

As a result of the current foreign fee-paying status of most dependants of scholarship recipients, the New Zealand Aid Programme is required to pay international school fees for these dependants: the budgeted cost for this in 2007/08 is $1.5 million. By comparison, Australian states generally treat the school-age dependants of AusAID students as if they are domestic students.

Objectives

The objective of this policy is to apply domestic status in state education to the school-age dependants of all New Zealand Aid Programme-funded scholarship recipients.

Alternative options

Two possible options are set out below.

a. Extend domestic status by regulation.

The measure to extend domestic status could be put into effect via a Notice in the New Zealand Gazette. This Notice, which would be signed by the Minister of Education, will specify that the dependant school-age children of all New Zealand Aid Programme students be treated as if they are domestic students (Education Act 1989, Part I, 2(e) refers).

Pros: This approach would be administratively straightforward, as it would be an extension of an existing and long-established system. It would also be simple to communicate to schools, and to the New Zealand Aid Programme, and would introduce a consistent policy for the school-age dependants of all New Zealand Aid Programme scholarship holders.

Cons: The extension of domestic status via regulation would impose costs to schools (as they could no longer charge the relevant international students full-fees) and to the Ministry of Education (as additional funding would be needed to cover the inclusion of an extra group of students in the domestic school system).

b. Continue to charge the students full-fees, paid by the New Zealand Aid Programme

The current system could be maintained, whereby most dependants of New Zealand Aid Programme scholars are treated as international fee-paying students whose fees are paid by the New Zealand Aid Programme.

Pros: This would have the virtue of avoiding any impact on the revenues received by schools from charging full-fees to this group of international students.

Cons: This would maintain the current problem of the differing treatment of dependants of New Zealand Aid Programme scholars (as noted above).

Preferred option

Taking these factors into account, the preferred option for addressing the problem is to extend domestic status through a Notice in the New Zealand Gazette. The costs to Vote Education would be met by a fiscally-neutral transfer from Vote Official Development Assistance (which would be authorised by Cabinet).

Risk assessment

Administratively, this process would be a low-risk measure, as the Ministry of Education exemption systems have been in place for several years. There is also a low risk of negative reaction from schools, due to the very small numbers of students involved (i.e. 140 in 2007).

Compliance costs

There are no additional compliance costs to the Ministry of Education of extending domestic status to New Zealand Aid Programme scholarship dependants. There are also not expected to be any additional administrative costs to schools. This is because classifying a New Zealand Aid Programme-dependant as a domestic student would require the same record-keeping (on the ENROL system) as entering them as a foreign fee-paying student.

Impact on the stock of regulation

A draft Notice (“The Education (Domestic Students) Notice 2008 Amendment No. 2”) has been developed. In order to simplify administration by schools, it would revoke part of an earlier Notice in 2001 (which extended domestic status solely to the school-age dependants of NZ Commonwealth Scholarship holders). This revocation is because the new Notice would mean that the dependent children of all New Zealand Aid Scholarship holders are now covered.

The proposed Notice would apply from 1 January 2009. This is expected to provide sufficient warning of the change in status for New Zealand Aid Programme scholarship dependants who are already enrolled in particular schools, and for schools to budget for the loss of revenue from these international fee-paying students.

Implementation and review

The domestic status for New Zealand Aid Programme scholarship dependants will be implemented by the Ministry of Education from 1 January 2009. A review of the administration of the exemption by schools will be assessed by reference to subsequent ENROL data on the numbers of exemptions granted, and feedback from the New Zealand Aid Programme on any implementation issues they may have encountered.

Consultation

The New Zealand Aid Programme and the Ministry of Education Schools Support Group have been consulted in the preparation of this domestic status exemption.